BoI set to close €200m client fund

Irish Independent - Business Week - - BUSINESSWEEK - Gretchen Frie­mann

BANK of Ire­land is on course to com­plete a €100m fund raise for a new flag­ship in­vest­ment fund set up in part­ner­ship with KKR, the global buy­out firm.

It is un­der­stood the lender has at­tracted suf­fi­cient com­mit­ments from clients to con­clude the deal by the end of the month.

The suc­cess­ful fund raise marks an im­por­tant mile­stone for Bank of Ire­land’s pri­vate arm as the first such ven­ture since the crash hit al­most a decade ago.

How­ever ex­pec­ta­tions that wealthy clients would stump up com­mit­ments of €1m to €3m each, typ­i­cal in the pre-cri­sis era, proved wide of the mark. The av­er­age in­vest­ment into the new fund is €400,000 to €500,000, ac­cord­ing to sources fa­mil­iar with the mat­ter. These smaller than an­tic­i­pated in­di­vid­ual com­mit­ment means a far larger num­ber of in­vestors has signed up to the new Di­ver­si­fied Pri­vate Mar­kets Fund.

Bank of Ire­land Pri­vate, which was merged with the group ear­lier this year, sourced cap­i­tal for the ven­ture from its own clients and from else­where in the group. It is un­der­stood a par­al­lel fund, housed within Bank of Ire­land Life, has helped bol­ster the new ve­hi­cle.

Bank of Ire­land Life is run by Seán Ó Murchú, the for­mer head of the pri­vate bank.

The an­tic­i­pated con­clu­sion of the fund raise comes amid a world­wide shift into al­ter­na­tive as­sets like pri­vate eq­uity as in­vestors hunt for bet­ter re­turns in a low in­ter­est rate en­vi­ron­ment.

The Bank of Ire­land/KKR ven­ture also un­der­scores the depth of ap­petite among well­heeled Ir­ish re­tail in­vestors for a sec­tor dom­i­nated by in­sti­tu­tional and ul­tra wealthy worth in­vestors.

In ex­change for lock­ing up their cash for ten years, the clients re­ceive an illiq­uid­ity pre­mium with the an­nual re­turn ex­pected to range be­tween 10 and 12pc.

KKR re­cently re­vealed a drop in its third-quar­ter prof­its, com­pared with the same pe­riod last year, but the buy­out be­he­moth also un­veiled a 17pc ex­pan­sion in as­sets un­der man­age­ment, to US$153bn.

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